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I was shocked—and upset—when the majority of my [engineering] students became investment bankers or management consultants after they graduated. Hardly any became engineers. Why would they, when they had huge student loans, and Goldman Sachs was offering them twice as much as engineering companies did?
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<p>Friends</a> Don?t Let Friends Get Into Finance | TechCrunch</p>
<p>Wall-Street lost 200,000 jobs this year and this isn’t just another down cycle, there are serious structural changes to the whole industry. Its going to be tough to get jobs on the street esp. with Frank-Dodd Act essentially punishing the big banks. On the other hand Manuafacturing is improving in the United States, a BCG report said that by 2015 it will be just as cheap to produce in southern US states as Chinese cities due to increases in cost-of-living. </p>
<p>Engineering is the way to go in the future.</p>
<p>Sakky…</p>
<p>Boy you are something else on this topic, lol.</p>
<p>I mentioned in another thread about WHY so many engineering & math grads go IB. As long as most engineering firms are going to give grads of top schools just a few thousand more of a starting salary than their non-top 10 school co-workers, what is the incentive for grads of top schools to go directly into engineering?</p>
<p>I work in software engineering and benefitted with a long career without a top 10 school, no AP credits, no internships and whatnot and work right next to and/or managed grads from Top-10 schools. I would not like the “open hiring” that software engineering does if I had went to a top school either.</p>
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<p>Sure, but by comparison, manufacturing has lost [url=<a href=“http://www.brookings.edu/papers/2011/06_manufacturing_job_loss.aspx]millions[/url”>http://www.brookings.edu/papers/2011/06_manufacturing_job_loss.aspx]millions[/url</a>] of jobs in the last few decades. </p>
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<p>Well, that’s not exactly a clarion call to inspire the next generation to be engineers, don’t you think? After all, I don’t think too many students are champing at the bit to join an industry which boasts of labor costs as equivalently low as that of a (wealthier) future China. Surely people prefer to join an industry where the labor costs are sky-high, for ‘high labor costs’ are just another way of saying ‘high pay’. </p>
<p>Like I’ve always said, if engineering jobs paid as well as Ibanking and consulting jobs did, people would be coming out of the woodwork to become engineers.</p>
<p>Investment Banking you work twice the hours and get paid twice as much. Whats wrong with that picture?</p>
<p>Baseballnerd, in the beginning, perhaps. But after a few years, you may still be working twice the hours, but are now making far more than twice as much; Ibanking is infamous for its rapidly increasing pay levels. Engineering, on the other hand, exhibits low pay ceilings. </p>
<p>Put another way: Engineering is where you can work for 20 years yet never make significantly more than you did when you started. What’s wrong with that picture?</p>
<p>Lest you think that to be an exaggeration, consider the example of ariesathena, a former participant on this forum who worked as an process engineer before leaving the profession for law school. Her former engineering coworkers congratulated her when she left, as they believed (probably correctly) that she would make a higher salary in her first year right out of law school than the engineers who had been working at the plant for decades, even after accounting for debt payments.</p>
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<p>I too worked for years as a SW Eng. I personally observed quite a variance in ability and could never have predicted which engineer went to high or low ranked schools based on performance. I would say I saw a small positive correlation between school rigor and performance, but not enough to justify big premiums for top school grads. Are you saying you’d like to see those premiums based on your experience in the workplace?</p>
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<p>I don’t really care about this issue, but:</p>
<p>200,000 jobs / 1 year</p>
<p>=</p>
<p>6 million jobs / “several decades”</p>
<p>so I’m not entirely sure what you’re trying to say.</p>
<p>Somebody remind me what’s stopping somebody from opening a new engineering firm that pays investment banking salaries to the nation’s best engineers? If their engineering talent is worth more than what you’re paying them, wouldn’t that be a winning proposition?</p>
<p>If no engineering firm could match the pay of an investment firm, that seems to imply that these engineers’ analytical skills are worth more in finance than engineering. Is it some group delusion that keeps engineering companies paying too little - less than top engineers are worth - and finance companies paying too much - more than top engineers are worth - or is it simply an indication that, despite what might seem logical, sensible, or obvious, top engineers simply provide more value in finance roles than they would have in engineering roles?</p>
<p>Here’s a provocative idea: perhaps finance is more important to modern society, to ensuring our democratic, Western, capitalist way of life, than is engineering, and pay is merely a reflection of this underlying (albeit initially counter-intuitive) reality.</p>
<p>Sakky, having a father who is very high up in a bulge-bracket firm I can say he has compromised quality of life. Its not just longer hours its stressful. Working on Thanksgiving and Christmas are a regular habit. He is in the office seven days a week and even at 53 is working 85 hours a week causing serious strains. Very few people make partner/MD level or even last a few years in the industry. Same applies to management consulting. In fact if you look at the numbers engineers make more out of school, more in mid-careers than business majors. Wall Street is the big outlier and gives business majors the idea that they will be making “bank” out of school. The wide majority of business majors do not make a whole lot of money. </p>
<p>The problems you describe with engineering apply to a whole lot of industries both in profit and non-profit areas.</p>
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<p>I guess once I got older, I looked at college as a “return on investment”. Now if that Top-10 university grad had scholarships or rich parents and did not have any debt (or low debt) out of school, then I can see going that route (from a software engineering industry viewpoint) because at least you have the chance at the non-engineering high paying jobs. If all you are going to get from a Top-10 degree is a few more thousand dollars as a starting salary (which nowadays is nullified because software engineers change employers so much), what is the advantage?</p>
<p>To answer your question, in a way…I don’t really have too much of an issue if the premiums were a little greater for grads on Top-10 schools in engineering. You have students whose parents have paid good money for private high-schools to be admitted into the Top-10 colleges. These students have competed against the best almost all of their academic career. I don’t know if I would like past to be overlooked after 5 years of work experience.</p>
<p>That’s too bad. Get off your high horse then. This isn’t political science. All engineers are smart.</p>
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<p>Then let me give you some counter-examples. What’s stopping American companies from paying American managers the same rate as do their Japanese or European competitors pay their managers, when there has never been any convincing evidence to indicate that American managers are more productive than are their foreign counterparts? Indeed, it’s gotten to the point that foreign multinationals that open divisions in the United States often times find that they have to pay their American underling managers more than what the (foreign) CEO of the company makes. So wouldn’t reducing the pay of American managers to European/Japanese levels be a winning proposition? </p>
<p>Or consider this example. Why do American firms persist in pursuing mergers and acquisitions - while generating millions in fees for consultants and investment bankers - when the empirical evidence demonstrates than the vast majority (65%+) of mergers and acquisitions have been proven to reduce rather than increase shareholder value, often times through a prompt market verdict, as the stock price of the acquirer generally decreases immediately after an announced acquisition? Furthermore, around 75% of all acquisitions have been shown to be dutifully spun off later …at a loss. Heck, even most CEO’s will readily concede that while most other acquisitions have lost value, their acquisitions will prove beneficial…a mathematical impossibility not dissimilar to the Lake Wobegon effect. Wouldn’t it therefore be a winning proposition, on average, if firms simply stopped merging? </p>
<p>It seems to me that the answer is quite clear: firms do not always make decisions to maximize their own profits. In particular, decisions executed by firms are made by managers, and those managers are obviously incentivized to maximize their own station even at the expense of the firm. For example, it seems quite likely - and indeed has been widely discussed in the financial literature - that a contributory reason why firms implement so many mergers is because the managers of those firms themselves may hope to join the very consulting and banking industry who helps to implement those mergers. By showering millions of dollars of service fees upon those consulting/banking firm, they hope to secure a sinecure in return, even if (as demonstrated to be historically probable), the merger will prove unprofitable. Keep in mind that from the consultants’/bankers’ perspective, they don’t care whether the merger ultimately proves faulty, for they’ve already been paid and they’re not returning any of those fees.</p>
<p>It is also clear that salary levels are heavily shaped by the social forces that permeate society. For example, a major reason - probably the key reason - that even poorly-performing American managers are paid more than are successful European/Japanese managers is because American social structure is simply more accepting of higher pay differentials. That social structure has itself been fostered by social signals, often times inadvertently. {For example, is it truly a coincidence that immediately after the Clinton Administration passed tax reform that exempted only the first $1 million of salary of top managers (as opposed to the unlimited exemption prior to the reform), <em>coincidentally</em>, numerous American top managers demanded boosts to baseline salary to match the $1million threshold? Apparently what happened is that the Clinton Administration inadvertently communicated a political signal that a $1million of salary is what a ‘real’ top manager is ‘supposed’ to make.}</p>
<p>But sadly as it stands, no extraneous forces exist to boost engineering salaries. Managers have little desire to jump to jobs as engineers the way they do to future jobs as consultants or bankers, so they have zero incentive to overpay a bloated engineering industry. We also sadly live in a society where it is not socially ‘acceptable’ for engineers to be highly paid (but apparently, we do live in a society where high salaries in law, consulting, or finance is socially accepted). </p>
<p>As a case in point, let’s say that you, as an enlightened manager, did propose to start a company that truly paid what (at least I think) engineers are truly worth? Be honest - you know what would happen: outside parties wouldn’t let you. VC firms and other investors would wonder why you were paying your engineers so highly, and demand that you stop doing so on pain of pulling their funding. The business press would run incessant news stories about your ‘foolishly high’ engineering payscales. Non-engineering employees would resist working for a firm that supposedly overpays its engineers but not them, when other firms do not ‘overpay’ their engineers (and it has been demonstrated from a psychological standpoint that a guaranteed way of generating internal team strife is when certain employees perceive that others are being overpaid but not them). Customers and suppliers would be reluctant to transact with a firm whose funding was so unreliable, who always seems to suffer from internal strife, and is the constant target of bad press. </p>
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<p>And if any notion has been shown to have been tragically decisively falsified over the last few years, it would be the above notion. I’m surprised that I have to even argue this point; all one has to do is read the news. In short, the finance industry has recently unleashed a buzzsaw of havoc not only upon themselves, but also upon the world economy as a whole, not only occasioning widespread losses to their own investors (ask Lehman, Bear Stearns, AIG, Washington Mutual, CIT, MF Global, RBS, Lloyds Banking Group, Dexia, and almost certainly more to come), but also precipitating taxpayer bailouts and rescues of unprecedented magnitude. It seems quite clear not that much (almost certainly most) of the activities of the modern-day finance industry not only do not add value to society, but actually destroyed value by exploiting loopholes in regulation to disguise risk. Frankly, the world would have been better off without much of the finance industry.</p>
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<p>Hey, plenty of engineers also work exceedingly long hours. Silicon Valley as an example, is notorious for marathon hours where engineers will often times literally never leave the office for weeks at a time, sleeping under their desk whenever exhausted. Microsoft engineers once had a saying that ironically touted their ‘flextime’ working hours: they could ‘flexibly’ work any 70+ hours of the week that they wanted. Video game firms such as Electronic Arts were notorious for working their engineers up to 100 hours a week. </p>
<p>To be sure, I agree that on average, engineers work less than bankers or consultants do. But neither I nor the original article that sparked this thread are talking about average engineers. See below. </p>
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<p>So then you parachute into a cushy job in corporate management. That highlights the other major advantage that the finance and consulting industries provide: their gold-plated brand names serve as passports towards entree towards top management jobs in other fields. In contrast, working as an engineer - even at a brand-name employer such as GE or Microsoft - only really qualifies you to simply be an engineer, or at best, an engineering project manager. </p>
<p>For example, I know a girl who - after less than a single year at McKinsey - jumped to a nice cushy management job in Europe, where she basically gets to jetset around the continent not for business, but for pleasure (as Europe has notably short working hours and long vacations): one weekend in Istanbul, another in Vienna, another in Rome, etc. And she’s not even European (she’s American). Her former engineering colleagues have no comparable opportunities. Heck, they’re showing up to the office on the weekends because they’re worried about losing their jobs completely, whereas she has no such concerns. {European workforce protection rules are such that, as long as you do your job, it’s practically impossible to be terminated.} </p>
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<p>I have always agreed that the average engineer does better than does the average person. That’s why I’ve always said that the average person should probably become an engineer.</p>
<p>But I’m not talking about the average engineer. Nor was Vivek Wadwha, who wrote the article that instigated this thread. He and I are talking about exceptional engineers who attend brand-name schools. And, like Wadhwa said, many of those students do not actually choose to work as engineers. Rather, they become bankers or consultants, for the simple reason that the engineering career path pays less and doesn’t really offer future career opportunities to, say, jetset in Europe. </p>
<p>And my question is why? In particular, why should finance/consulting be a more desirable career pathway than is engineering, especially given that the value that the former industries (especially finance) deliver to society is questionable at best?</p>
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That doesn’t really answer my question, and you know it. Nothing’s stopping somebody who’s not greedy from opening a not-for-profit engineering firm that pays I-banker salaries to top engineers. You’ve only provided examples of people acting irrationally, and I never claimed that people weren’t doing that. “There exists x such that not P(X)” does not disprove “There exists x such that P(x)”…</p>
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I don’t think it’s that clear-cut. Sure, the current economic slump is attributable to the finance industry. There are good times and bad. Surely governments and politicians - I think that, in America, we could think of this as the politics industry - has not been helping matters for the last decade. Would America have been better off without politicians (or government?). Furthermore, I think it’s naive to put engineering on a pedestal. This may be a bit of a cliche, but it seems to me that Germany might have been better off without engineers (and engineering?) during the 1930s and 1940s. All I’m trying to say is that while individual people can act irrationally and to the detriment of society, and while many of these people can seem to be concentrated somewhere at some point in time, it doesn’t necessarily say so much about their environment (or profession) as it does about human nature. I mean, the top engineers aren’t blameless, right? If they cared about society, they’d do engineering for less money, rather than sell their souls to finance.</p>
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<p>And I confronted your question directly in a later paragraph. To reiterate what I said, even if you tried to found such a firm and pay top-dollar to top engineers, the current business social infrastructure would conspire against you. Investors would demand to know why you’re ‘stupidly overpaying’ your engineers, and would therefore probably not fund you. {For example, VC’s often times want you to detail your engineering outsourcing strategy in your business plan - to ensure that you’re paying as little as possible for your engineers - or otherwise they won’t fund you.} Non-engineering employees - and every engineering firms must employ plenty of non-engineers - would demand to know why only the engineers are being (supposedly) ‘overpaid’ when they’re not, and especially when they compare your ‘overpaid’ engineers to engineers at other firms who are not being overpaid. {Nobody wants to work for a firm where they perceive that others are being overpaid when they’re not.} The business media would publish story after story about your ‘stupid’ employment strategy. Bad press, lack of investor capital, and poor employee relations would inevitably scare away customers and suppliers who would fret for your reliability. </p>
<p>To cite Heath Ledger’s Joker: “Nobody panics when things go according to plan…even if the plan is horrifying.” That is to say, the reason why none of the parade of horribles enumerated above rarely happens to firms that irresponsibly overpay their CEO’s for terrible performance is because plenty of other firms have also irresponsibly overpaid their CEO’s for terrible performance. But to overpay your engineers would be to break a powerful social taboo. </p>
<p>But social taboos change, if slowly. For example, while perhaps inconceivable nowadays, it was only perhaps a generation or two ago when the banking industry was not extraordinarily well paid. Perhaps one day the social taboo of paying your engineers well will be broken.</p>
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<p>I’ll call you and raise you: I suspect that Germany might have evolved into a peaceful nation during the 1930’s/1940’s if not for one event: The Great Depression, which struck Germany the hardest of all of the developed nations. After all, the German Weimer Republic of the 1920’s was considered to be a golden age of prosperity and enlightenment in modern German history when, frankly, Germany was arguably more racially tolerant than even the United States. {Jews occupied numerous high society positions during Weimar, and Josephine Baker was a major star in Germany but had to urinate in a cup when visiting the Southern United States because Jim Crow prohibited her from using public toilets.}. </p>
<p>Oh, and what instigated the Great Depression? A catastrophic financial crash. </p>
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<p>Nobody except for the most extreme anarchist is arguing that we should have no government, and similarly nobody is arguing that we should not have any financial industry at all.</p>
<p>But at the same time, I think there is now widespread consensus that the financial industry had become far too large and had imposed untold risks upon society, the fruits of which we see before us now. A main reason why financiers were so highly paid is because the finance industry had successfully privatized their profits while socializing their losses. </p>
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<p>I prefer not to cast blame upon any individuals who are simply following the incentives laid before them. Engineers who leave engineering for finance do so because finance pays them better, but the reason why finance pays better is because the finance industry is able to externalize risks onto the taxpayers via bailouts. But that’s a flaw in the system that we as citizens of this nation ought to fix.</p>
<p>If you are a day to day engineer who works on infrastructure or industry type of projects with specializations in Civil, Mechanical, Chemical specializations that require a P.E. to do your work, your salary is pretty much fixed based on the number of hours you can work since the rate is already dictated by your clients and the bidding process. The people who may make more money are the owners/partners of such businesses but it is still quite hard to cross 250k unless your firm is really large and you are consistently in a growth mode, which invariably never happens since it is a very cyclical market prone to layoffs every few years and then ramp ups when the economy improves.</p>
<p>I got this e-mail a few days ago from my career center (I feel I’m at one of those target schools for recruiting quants), and here’s the jobs (and order) they were listed.</p>
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<p>What’s absurd to me is I’m at a school that’s 100% technical majors, and yet there’s only a small number of jobs seem to exist for people not wanting to be either a banker, programmer, or consultant.</p>